Now that we are into March, the changes in stamp duty are edging ever closer and if you were planning on snapping up property before the changes came into being, you are running out of time. From the 1st of April 2016, anyone buying a second property will face an additional 3% stamp duty charge on their purchase. No one likes paying extra for something and this is amplified when it is not a charge that everyone has to pay.
It is easy to see why many landlords are feeling victimised with this change, and all of the other upcoming tax changes that will impact on them, but what impact will it genuinely have on the property market? The change has been implemented in the hope of reducing the number of properties being bought by landlords and investors in the buy-to-let market. In theory, this should increase the likelihood of first-time buyers and families buying the properties that are on the market. In reality, there is absolutely no guarantee that this will be the case.
While there are many reasons that the letting market has become hugely significant in Stockport, and in the United Kingdom, a large factor is down to the fact that many people and families cannot afford to buy homes. Making property more expensive for landlords doesn’t change the amount of money that a standard family can afford to pay, nor will it really impact on their ability to obtain a suitable mortgage.
This means that the property market may have this supply of property that people can’t afford to buy or don’t want to pay the price that they ultimately have to. In the long term, this may see property prices falling so that landlords and buy to let investors find that the additional stamp duty they are paying is cancelled out by a lower property price. In this instance, the rental yield a landlord can expect to receive from their property will not change, so in the long run, the stamp duty increases may not actually impact on landlords or buy to let investors in the way that it was intended.
Of course, the nature of calculating rental yield means that some landlords will deal with the stamp duty increase. The increase in stamp duty can be cancelled out by:
- Charging a higher rental fee
- Reducing the expenditure on maintaining the standard and condition of the property
There two elements and purchase price are the main strands involved with calculating rental yield and if a landlord has to pay more to obtain a property, charging a higher fee to tenants or spending less on the upkeep of the home will balance out the increase in stamp duty. In these outcomes, it will be the tenants who are penalised by the stamp duty changes, which is something that many critics have pointed out.
With respect to the property market in Stockport, it will be an interesting few months. While property sales take place all year round, Spring and Summer are traditionally strong periods of the year but this year has seen many property purchases take place in the opening months of the year.
There will be some upheaval and impact on the Stockport property and lettings market after these changes are implemented, it would be wrong to suggest otherwise, but equally, it would be wrong to say for definite what the outcome will be. Whether you are considering buying, selling, letting or renting property in Stockport and Greater Manchester, there is a great deal to be said for working with a local estate agent who understands the local property market. Regardless of how the stamp duty changes impact on the Stockport property and rental market, stay in touch with Spencer Harvey to receive the best information and guidance.